Monday 4 June 2007 19.08 EDT
First published on Monday 4 June 2007 19.08 EDT

Those who feel a certain sense of deja vu about the deteriorating relationship between Russia and the west can be forgiven. But this is no simple return to the cold war. Russia is far weaker than even the atrophied superpower of the late 80s. Its population has been more than halved, its gross domestic product halved, and living standards diminished. It simply does not have the capacity to be what it once was.

After the Soviet Union collapsed there was a brief interregnum during which the relationship between the west and Russia was set fine. The underlying reason was that Russia was a broken country and Boris Yeltsin was prepared to do the west's bidding by embracing, at least ostensibly, western-style democracy and the free market. In fact, of course, the newfound Russian democracy was little healthier under Yeltsin than it has been under Putin. Worse, Yeltsin's free market meant giving away the country's riches - notably oil and gas -to the oligarchs, in return for their electoral support. In most respects, Yeltsin was a disastrous president. Certainly in terms of putting together an economic strategy that might rescue the country from economic oblivion, Putin has been in a different league. In restoring state control over the country's oil and gas reserves, he has rightly drawn on the East Asian model rather than Anglo-American neoliberalism.

The starting point for understanding the deterioration in the relationship between the US and Russia lies in Washington, rather than Moscow. After 1989, Russia was a defeated power. Despite the fine words and some limited gestures, the Americans have treated it like one. Their policy has been one of encirclement. Following the end of the cold war, there was much discussion concerning the point of Nato. In the event, it was reinvented as a means of reducing Russia's reach on its western frontiers and seeking to isolate it. Its former east European client states were admitted to Nato, as were the Baltic states. It now finds itself militarily encircled to its west and, in central Asia, to its south. It is hardly surprising that Russia is unhappy about these developments. Not only are its reasonable security concerns being trampled on, but it also feels it is being humiliated.

The US proposal to site its anti-missile defence shield on Polish and Czech territory can only add salt to the wound. Does anyone seriously believe, as the Americans claim, that its purpose is to resist a nuclear missile attack from Iran or, even more far-fetched, North Korea? The Russians rightly believe that the system is first and foremost directed against them, as a means of further isolating them. In response, Putin has tested a new long-range missile and suggested Europe might again become the target of its nuclear weapons. This is a far cry from the mood of the mid-90s: we stand on the eve of a new arms race.

In this context, it is time to see US policy, and even the cold war, in a new light. The latter was presented as a struggle between capitalism and communism and yet, with the latter consigned to its grave, what is palpably a capitalist Russia is being demonised as the new enemy. This is not to argue that Putin's Russia is a particularly attractive proposition, but it is far from beyond the pale. Furthermore, since 9/11 the US has emerged in a new nationalist guise, as an expansionist superpower bent on extending its global influence and creating a new-style empire through unilateralist means. It is worth remembering that the proposed siting of the anti-missile defence shield was a US, not US-European, initiative. There is an obvious link between Bush's Middle East policy and his attitude towards Russia, namely the global ambitions of the US administration following the collapse of its only rival.

This is not to deny that Russia poses a potential threat to Europe, notably in terms of energy supplies, or that its political culture is prone to an arbitrary and authoritarian mentality. But Russia is not about to change, and we must find a modus vivendi that respects what it is and recognises its legitimate interests. The danger with the US attitude, and any new cold war spirit in Europe, is that it will drive Russia into a corner. The consequences are already apparent. As soon as Russia has felt a little stronger, largely as a result of rising oil and gas prices, it has been more assertive. But in global terms it remains weak and fundamentally incapable of aspiring again to superpower status. Mikhail Gorbachev was surely right when he pointed the finger of blame for the present mess at Washington.

· Martin Jacques is visiting research fellow at the Asia research centre, London School of Economics